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The chief executive and chief financial officer of embattled building products company James Hardie Industries have stood aside in the wake of the findings of a special inquiry into the company's asbestos liabilities.

The James Hardie board made the announcement after reviewing the findings of the inquiry into the company's underfunding of asbestos compensation.

"Effective immediately, Mr Peter Macdonald is standing aside as Chief Executive Officer and Mr Peter Shafron is standing aside as Chief Financial Officer. An acting CEO and acting CFO will be appointed,'' James Hardie said in a statement.

"The board expects to make announcements in respect of these appointments in due course.''

The conduct of both men is currently being investigated by the Australian Securities and Investments Commission (ASIC) Inquiry head Commissioner David Jackson, QC, had found that Mr Macdonald had appeared to have broken the corporations law when he issued a statement about the company's asbestos funding in February 2001.

Mr Jackson also found that both Mr Macdonald and Mr Shafron had breached the Trade Practices Act and the Fair Trading Act as well as their duties as officers of a company.

James Hardie said today both men would remain working at the company until "matters surrounding the Commissioner's report and the ASIC investigation become clearer".

"To preserve business continuity, Mr Macdonald has agreed to be responsible for the business operations of James Hardie. He will remain based in the United States," James Hardie said.

"Mr Shafron's future role with the company is currently under consideration by the board, but it is planned that he will undertake a number of projects for the company, outside the CFO's function, in both the United States and the Netherlands."

James Hardie also said it intended to work with unions to develop a solution to resolving the asbestos compensation funding crisis.

At the moment, funding to compensate victims of James Hardie asbestos products is set to run out in just three years' time with a shortfall of at least $1.5 billion.

James Hardie chairwoman Meredith Hellicar said the company had the "will and the capacity" to address a key finding of the Commissioner's report, which stresses the need to develop a means of sustainable long-term compensation for asbestos disease sufferers.

"We will seek to work with the ACTU, as requested by (NSW) Premier (Bob) Carr, to develop a solution that is in the interests of claimants, shareholders and all parties that rely on James Hardie for their livelihood, income or well-being."

Mr Macdonald also issued a statement, in which he apologised for the "anxiety and distress" that the funding shortfall may have caused.

"I acknowledge that the funding provided to the Foundation that was established to pay asbestos disease sufferers has proven to be insufficient," Mr Macdonald said.

"I apologise for any anxiety and distress that this funding shortfall may have caused.

"It is my intention to vigorously defend myself against allegations made by Commissioner Jackson, at the appropriate time and in the proper forum.

"In the meantime, I look forward to continuing to work in the best interests of the company and its shareholders - and to ensuring James Hardie continues to grow and perform strongly.